India unveils new defence procurement policy, permits leasing of equipments


Defence Procurement Procedure (DPP) 2020: Indian defence minister Rajnath Singh Friday unveiled the draft of Defence Procurement Procedure (DPP) 2020 with the aim to make the country a global hub for manufacturing defence products and reduce the timeline for delivery of weapons, the new policy will also permit leasing or renting in addition purchase and manufacture of defence equipments.

“Our aim is to make India self-reliant and a global manufacturing hub,” said the defence minister .

In August last year, India constituted a high-level panel under the leadership of director general of acquisitions of ministry of defence to formulate a new defence procurement policy.

Indian leader said that the focus of government policies is to empower small and medium industries (MSME) and private sector to boost the indigenous defence production.

“The defence industry of India is a strategically important sector having huge potential for growth. It needs to be the catalyst for India’s economic growth and realisation of our global ambitions,” said the defence minister.

He said it was the time to further strengthen Prime Minister Narendra Modi’s flagship scheme – Make in India in Defence, refine the life cycle support of procured equipment, speed up the defence acquisition process, simplify the procedures to reduce the overall procurement timeline.

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New Defence Procurement Policy (DPP) 2020

One of the most important change proposed by the new defence procurement procedure (DPP) is include the ratio of indigenous content by another 10% in different categories to support Make in India scheme.

A simple and realistic methodology has been incorporated for verification of indigenous content for the first time.

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Another thrust area is to encourage the use of indigenous raw materials, special alloys and software developed in India by incentivizing their use in defence production.

The draft DPP also gives assurance of procurement on a single vendor basis from aero engine manufacturing unit and chips from FAB manufacturing units established in the country.

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The policy has introduced a new category Buy (Global – Manufacture in India) with minimum 50 per cent indigenous content. The value of indigenous content will be calculated on the total contract value.

Only the minimum necessary items will be brought from abroad while the balance quantities will be manufactured in India.

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This category will be given preference over to existing ‘Buy Global’ category as manufacturing will happen in India and jobs will be created in the country.

Under the new defence procurement policy, leasing has been introduced as a new category for acquisition in addition to existing ‘Buy’ & ‘Make’ categories to substitute huge initial capital outlays with periodical rental payments.

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